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Business News/ Money / Calculators/  Tax liability in India depends on the period of stay

Tax liability in India depends on the period of stay

You will also be required to examine the nature of income earned by you


Can I draw a gift cheque in dollars payable to my uncle’s daughters (they stay in India)? If yes, will they have to pay tax on the interest accrued from money that they receive?

—Indu More

Receipt of gift of money by a person resident in India is permitted without any restriction under the exchange control regulations. Consequently, it should be possible for you to draw a gift cheque in favour of your uncle’s daughters. As per the Indian income tax provisions, where an individual receives any sum or money exceeding 50,000 in one financial year, without any consideration, the sum or money in excess of 50,000 would be taxable in the hands of the recipient being the individual as income from other sources. However, this rule does not apply to money received from certain relatives. But since the term relative does not include lineal descendant of the brother of the parents, the amount received by your uncle’s daughters will be taxable.

What are the tax liabilities of someone leaving India but has income earned in India in the year of departure?

—T. Yogeshwar

The taxability of any income in India will depend on the following factors: residential status for the purpose of the Indian tax laws; nature of income and its taxability in India; and if you are a non-resident, the applicability and benefits, if any, that may be available to you under the applicable double taxation avoidance agreement.

If you stay in India for a period of 182 days or more during the year or if you have stayed for 365 days or more in the previous 4 years and for 60 days in this year, you will be considered to be a resident for taxation. Further, if you are a citizen of India who is leaving India for the purpose of employment or as a member of the crew of an Indian ship, then your stay in India will have to be 182 days or more in the current year to qualify as an Indian resident. If you qualify to be a resident in the year of departure, then your global income would be taxed in India irrespective of where such income has been earned. However, if you qualify to be a non-resident, only such income that accrues or arises or is deemed to accrue or arise in India or received or is deemed to be received in India would be taxable. Accordingly, the income earned by you in India will be taxable in India, irrespective of whether you are a resident or a non-resident and income earned outside of India will be taxable in India depending on your residential status. However, in determining the taxability of the income earned in India, you will also be required to examine the nature of income earned by you.

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Published: 12 Feb 2015, 07:39 PM IST
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